Schwab Impact Conference 2013 - Finally! Some Good News from D.C.

Earlier this week my wife (who doubles as Sungarden’s Director of Operations) joined me for three days in Washington D.C. at the Schwab IMPACT conference for investment advisors. To me, this is the biggest show of the year in our industry and the Capital edition continued the traditional mix of new ideas, networking and a feeling at the end once described by David Letterman as “I’m tired…but it’s a nice kind of tired.” Here are some brief highlights and what I think the implications are (if any) for what we are doing for our clients now and in the times ahead:

1. The best presentation I have attended in over a decade of Schwab conferences was given by Suzanne Duncan of State Street’s Center for Applied Research. It’s a free report and I encourage any investor or financial advisor interested in learning how they should really look at investment performance to go and read it. A few quick conclusions:

The S&P 500 is not a benchmark most investors should be using for their own performance measurement, Morningstar star ratings on funds are for past-performance chasers, and performance in general should be redefined to focus more on an investor’s particular desired outcome. That about summarizes my personal views on performance as well.

2. The investment advisory industry has many ideas to solve the retirement income crisis for investors…but none of them really hit the nail on the head. This was a topic in the State Street session I attended, and it is further evidence of what has been percolating here at Sungarden for a while now. As we believe we may have hit that nail on the head with our Cash Flow FocusedTM portfolio strategy, I will be blogging on the retirement income topic…and how to address it…quite a bit in the coming weeks. Stay tuned.

3. Schwab will be introducing Docusign in early 2014. This is an electronic signature system which will eliminate much of the need for live signatures. Yes, another hit to chops of the U.S. postal service!

4. We were blown away by an analytical product called Hidden Levers. It will allow us to take any client portfolio or one of our investment model portfolios and stress-test it for a wide variety of scenarios, both past and imagined for the future. I cannot do the product justice in this limited space, but we will be testing it out in the coming weeks with big plans to use its powerful analytics for our clients. We purchased the product on the spot at IMPACT.

5. We speed-interviewed seven Virginia Tech students who are studying in the CFP program with that University’s business school. Students from Texas Tech, William Patterson College students were also at the conference. In an industry like ours which is starving for quality, motivated young talent, this was a terrific experience to have, brief as it was. Our thanks to the students and their advisor for doing this with us.

6. There are STILL too many mutual funds! The Exhibit Hall, known as “The Exchange,” was wall to wall fund companies. At Sungarden we run portfolios whose core investment is individual stocks and ETFs supplement that core. Mutual funds are used sparingly, which is a far cry from some time ago when I lead-managed a mutual fund that mainly owned other mutual funds. I rotated toward individual stocks for many reasons, as stated in one of my earlier blogs. The sheer number of fund companies that look and sound alike has me happy with my decision. I sense that advisors in general are making the same rotation away from mutual fund-laden portfolios, but at a snail’s pace. To each their own.

7. The Smithsonian’s Presidential Portrait Gallery was memorable and as my wife said, “hauntingly beautiful.” We viewed portraits of every one of our nation’s leaders but the one that struck me was a painting of George Washington, created a couple of years before his death. There were no glass cases around the portraits and you could walk right up to them. For a moment we felt as if we were standing there with Washington himself at the moment he inspected the work of art at its completion. I can’t explain why, but it was simply moving (not the picture, the moment).

And moving is what one does at IMPACT. We probably logged about 15 miles in three days, in a conference center that was long and full of reasons to interact and learn. Over the years I have been a speaker, exhibitor and attendee at IMPACT. It is always a great experience.

I am sure that some in my industry think that these big shows are played out once you have been to them, but 27 years into what I consider to be one of the greatest professions around, it is still an event we look forward to every year. Next year in Denver, we’ll do it again.

© Sungarden Investment Research

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